Tekcapital’s Guident has been awarded a grant from the Space Florida-Israel Innovation Partnership program. The project aims to incorporate low-latency satellite connectivity into Guident’s autonomous vehicle remote monitoring service, helping improving self-driving vehicle safety and reliability.

Set to begin in July 2024, the initiative will utilise non-geostationary satellite technology to create a communication system between autonomous vehicles and remote control centres. The technology is aimed at addressing limitations in terrestrial network coverage, allowing for continuous operation of self-driving vehicles in all weather types and geographical areas.

Tekcapital shares rose after the news was released on Thursday.

Guident is collaborating with Israeli satellite communications company NOVELSAT on this project. NOVELSAT specialises in next-generation content connectivity solutions and will contribute its broadcast and broadband technologies to the project. The partnership aims to enhance network capabilities for autonomous transportation.

The project focuses on developing a system architecture that combines artificial intelligence with satellite communications intended to improve the safety, efficiency, and reliability of autonomous vehicles, which could influence the future of transportation.

As the autonomous vehicle industry develops, Guident’s Space Florida-supported project is aimed at addressing challenges in vehicle communication and control, promoting the adoption of self-driving vehicles through road safety and efficiency.

“At the heart of this project is our commitment to advancing teleoperation safety through rigorous research and testing. We aim to ensure the highest safety and performance standards for autonomous vehicles equipped with this pioneering communication system,” said Dr. Dennis Morgen, Guident’s Vice President for Product and Project Management commented.

“This grant will propel us forward in developing an effective remote monitor and control solution with Space Florida’s invaluable support and strategic expertise.

“This project marks a significant milestone in Guident’s dedication to innovation in autonomous vehicles and monitoring solutions. With a talented team of researchers, engineers, and industry experts, we believe Guident is poised to impact the future of AV transportation.”

The industry has broadly welcomed new FCA rules to attract exciting companies to London’s exchanges, but there is a general consensus that the changes should be the beginning of a comprehensive package of measures to improve London’s standing on the global stage. 

The FCA have published new rules for listings that aligns the UK with international markets in an effort to bolster London’s ailing equity markets.

The policy statement released today, beginning with ‘The UK’s capital markets are the engine room of our economy’, outlines an array of changes to listings rules, including amendments to shareholder voting requirements and abolishment of the ‘premium’ and ‘standard’ lists, which are to be replaced by a single category.  

UK authorities have been under pressure to act to support London’s capital markets, and today’s FCA policy statement is a direct result of initial work started by the last government.

“A thriving capital market is vital in delivering investment to growing companies plus returns and choice to investors. That’s why we are acting to make it more straightforward for those seeking to list in the UK, while retaining vital protections so investors can help steer the businesses they co-own,” said Sarah Pritchard, Executive Director, Markets and International, at the FCA.

“Regulation is only part of the answer in helping the UK achieve sustainable growth. Other factors also play a significant role in influencing where a company decides to list. We’re committed to continually working together with all those who have a part to play in supporting a thriving UK capital market and thank everyone who has contributed to this work so far.”

With the FCA doing their part to help promote the UK’s capital markets with these early and targeted rule changes, the industry will also have to do theirs to capture the interest of global companies seeking a listing.

“The FCA has simplified the rules for companies looking to list in the UK,” explained Matt Britzman, senior equity analyst, Hargreaves Lansdown. “This comes after the UK has been shunned by companies, both new and existing, due to an overcomplicated system and valuations that lag some of the overseas markets on offer. Simplified listing rules are a first step, but there’s still more work to be done if the UK wants to regain a reputation for nurturing exciting new businesses.

London was once seen as a global power house for international companies seeking to raise capital. However, the number of companies listed in London has plummeted and the IPOs have slowed to a snail’s pace. 

The reaction to today’s rules changes has been positive and seen as a step in the right direction, yet some signal the new Labour government has its work cut out to take London back to its former glory.

“Any policy change that can incentivise or encourage more firms to list in the UK should be welcomed with open arms,” said Dan Moczulski, Managing Director UK, eToro.

“There is a lot of talk about growth from our new government right now. To deliver it, we need a thriving capital market. This requires an environment where companies see the UK as an attractive place to list, and where investors want to invest. 

“The virtuous cycle is clear: more companies listing in the UK attracts more investors, both domestic and global, boosts share prices, and generates more wealth, which in turn encourages even more companies to list. This is arguably the holy grail for our economy in terms of growth. While Jeremy Hunt set his sights on this goal, it’s now up to Rachel Reeves to make it a reality. Hopefully these new rules can help generate momentum for further policy initiatives, laying the foundation for a more dynamic and prosperous UK capital market.”

The FTSE 100 was firmly higher on Wednesday as the index took its lead for the Asian and US sessions which closed at, or very near, record highs.

London’s flagship index was 0.6% higher at the time of writing on Wednesday.

“The FTSE 100 regained some of the ground lost yesterday as a combination of airlines and precious metals miners helped give the market a lift,” said AJ Bell investment director Russ Mould.

“This followed gains in Asia and on Wall Street overnight, with Japan’s Nikkei 225 attaining a new record level.

“Testimony from Federal Reserve chair Jerome Powell before the US Senate saw him flag a return to normality in the labour market. While he made no commitment on rate cuts, jobs data is one of the most important influences on the Fed’s decision making because tight labour market conditions and rapidly rising wages can lead to inflation becoming entrenched”

The Fed chair’s testimony was shrugged off by markets which continue to fixate on AI-related technology shares propping up US indices such as the S&P 500.

“US indices are still hanging close to record highs, with enthusiasm over AI possibilities and hopes for a soft landing for the economy still buoying sentiment,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.

“Eyes will now be drawn to tomorrow’s Consumer Price Inflation report for indications about the future direction of travel. Another shift lower in headline inflation is expected, which should help maintain the largely optimistic outlook. A reading of 3.1% year-on-year is expected in June, down from 3.3% in May.”

The FTSE 100’s gains were broad on Wednesday, with all but 13 constituents trading in positive territory at the time of writing.

Airlines were among the top gainers with IAG soaring 3.4% and Easyjet adding 2.7%. IAG was the beneficiary of a broker upgrade, and Easyjet embarked on the trip higher in sympathy.

One of the few fallers was Barratt Developments after the housebuilder said it expected completions to fall again next year after a pretty dismal year’s trading in 2024.

“Barratt’s full-year trading update showed that it’s hard to build momentum when the entire housing market has been on unstable ground. The group completed around 14,000 new homes this year, which was towards the top end of group guidance, but still marks a big drop off from the prior year,” said Aarin Chiekrie, equity analyst, Hargreaves Lansdown.

“Buyers are very sensitive to mortgage availability and affordability pressures. Although there have been improvements on this front over the second half of the year, further easing of mortgage rates will be necessary for activity to pick up significantly.”

Barratt Developments shares were down 1.3% at the time of writing.

Those with good memories will remember the fanfare surrounding Petro Matad when it first discovered oil in Mongolia in 2010. Petro Matad made a series of discoveries that made it one of the most exciting London-listed exploration companies of the time.

Recent developments for the company are reigniting this excitement, and rightly so. Brokers’ price targets suggest Petro Matad shares could appreciate multiples of the current price, and there is now a solid foundation for them to do so.

UK Investor Magazine published ‘Four UK Small Cap Growth Shares to Watch Summer 2024’ just before the announcement of a material development for Petro Matad in late June. Should timings have been different, this selection would likely be Five stocks and include Petro Matad.

The company has been substantially derisked as an investment for new investors after raising $8.9m by way of a placing in late June. The funds will be used almost exclusively to take Petro Matad’s Heron project through to production in 2024/25, a milestone that will unlock substantial shareholder value.

However, it has not been plane sailing for Petro Matad, and many investors may have only recently considered the stock after a heavily discounted placing.

In 2010-2012, the Mongolian natural resources sector was in the limelight. Rio Tinto was developing the world’s largest copper deposit at the Olu Tolgoi copper mine, capturing the attention of global investors and Mongolia was opening up to overseas investors.

Petro Matad rode this wave for a short period as evaluation of its assets revealed the extent of the resources in place at its Block XX field. The excitement around the quality of oil in place was replaced by frustrations at the Mongolian bureaucracy, and Petro Matad shares suffered dearly. Early investors were left licking their wounds.

Fast forward past numerous hurdles and bumps in the road, a ruling by the Mongolian government to certify Block XX and the Heron discovery as special purpose land in 2023 represented a step change in the authorities approach. A land usage agreement signed in early 2024 has paved the way for production to begin. 

Production from Petro Matad’s assets has been a long time coming. The first production-sharing agreement with the Mongolian government was signed nearly 20 years ago, in 2005. The Petro Matad saga should serve as a lesson to natural resource investors about just how long it takes for the production of promising assets to begin. 

With approvals and licensing agreements seemingly mostly complete, Petro Matad now has a clear path to production and the opportunity for share price appreciation.

Early production at the Heron project is expected to help support exploration, evaluation and eventual production across the rest of the Heron prospect, and the Gobi Bear prospect. The company has a 5-year plan to reach production of 9,000 barrels of oil per day.

In addition to oil production, Petro Matad is harnessing Mongolia’s landscape for renewable energy generation through a JV with SunSteppe, which already has a battery storage system and a green hydrogen project powered by wind power underway. Petro Matad’s transition to an oil producer and clean energy producer will provide diversification and potential revenue streams long into the future.

Broker targets

Zeus has a price target based on a Core NAV of 4.3p, rising to 28.7p for Total Unrisked NAV. The greater of these two price targets represents substantial upside to the current share price of 2.8p.

The Zeus price target, as with most broker price targets for AIM companies, should be taken with two shovels of salt. That said, it does provide some scale of where Petro Matad shares could go in the medium term.

For context, much of the Total Unrisked NAV valuation (17.9p of 28.7p) is derived from further exploration of the Saiga and Gobi Bear projects in Block XX. Zeus’s price target does not include the renewable JV.

Market conditions

The market conditions for early-stage natural resources companies favour Petro Matad. There has been a notable uptick in interest in the sector in recent months, and several companies have yielded investors very respectable returns, especially in speculative Helium-related plays. One would expect some of this cash to find its way into Petro Matad as the fast money spins into the next opportunity.

But this isn’t just a short-term play. The company says it expects the recent fundraise to take it through to production at Heron. This means cash flows and, very likely, further shareholder value creation through the evaluation of prospects in Block XX.

We must note, Petro Matad doesn’t come without potential operational setbacks that could pose a risk to the share price.